The foul smell of state cryptocurrency legislation
Llew Claasen
783

Llew — have you talked with Jerry Brito and CoinCenter on this? They believe you are misconstruing things. I hope you guys are coordinating and speaking. From an email they sent to their members:

“ERRORS OF THE BITCOIN FOUNDATION LETTER

1. The primary policy argument is that applying AML/KYC standards to VC companies is burdensome and unnecessary; but the author fails to realize that the ULC model act has nothing to do with AML/KYC (it being a consumer protection regulation) and that any US based VC company **already** needs to do AML/KYC compliance under federal law and guidance from FinCEN. So the ULC certainly doesn’t make that state of affairs worse; in fact it modestly improves that situation by carving out personal and academic users as well small-value start-ups from a licensing requirement making it **more** difficult to prosecute such parties under overbroad federal criminal laws against unlicensed money transmission.

2. It suggests erroneously that the bitlicense was the foundation for the draft law. There was never a point in the drafting process where bitlicense language was adopted wholesale. And this near-final draft shares effectively nothing with the bitlicense.

3. It suggests erroneously that bitcoin businesses who don’t hold private keys will need to be licensed and comply. The text quoted to support that position says nothing about private keys and isn’t even the actual text of the model law (it’s part of the explanatory intro). The actual law clearly defines “control” of virtual currency in a way that would not include anyone without sufficient keys to unilaterally initiate or prevent a transaction and no one without “control” is required to get a license.

4. The post reiterates the “premature” nature of regulation in this space, because apparently the author is (as discussed earlier with AML/KYC) entirely ignorant of the fact that there is already regulation of this space. It’s chaotic, often poorly drafted, and provides no safety or certainty for businesses or their customers and the ULC model law is one of our best opportunities to fix that current state of bad regulation.

5. It alludes to the success of the crypto-valley in Switzerland without acknowledging that the fundamental advantage companies in that country enjoy is a uniform approach (not a non-regulatory approach … just one approach as an alternative to 53 states and territories) and that the ULC is attempting to recreate that unity (not prevent it) here in the US.”

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